Understanding Influencer Marketing and Its Tax Requirements

The recent and remarkable growth of influencer marketing — which enables businesses to collaborate with individuals who have an online following to gain increased brand exposure — is one of the most fascinating phenomena in today’s digital economy. Some high-profile influencers even earn more than the CEOs of large publicly traded companies.[1] Top TikToker, Charli D’Amelio, has 133 million followers and received a whopping $17.5 million in 2021. This figure was higher than either ExxonMobil CEO’s $15.6 million compensation or Starbucks CEO’s pay of $14.7 million. D’Amelio’s sister, Dixie D’Amelio, with 57 million followers, made $10 million during that same year. Her earnings exceeded the $9.2 million paid to the CEO of Southwest Airlines.

This lucrative new business does make some wonder whether influencers pay taxes and, if so, what tax rules apply. This report addresses these issues, first by providing an overview of the influencer marketing industry and then reviewing tax rules pertinent to influencers, key pressure points of influencer tax compliance, and the actions that tax authorities can take to improve compliance. Finally, this report lists some non-tax issues relevant to the expansion of influencer marketing.

A New Phenomenon Evolving From an Age-Old Technique

Although there is no formal definition, influencers are generally social media personalities with dedicated followers, who together form a core audience devoted to following the social media posts of specific influencers.[2] The most popular influencer platforms are Instagram, Facebook, TikTok, and YouTube. Some also have relationships with Amazon and Snapchat. Because most influencers create their own content to attract followers and monetize these posts, some call the influencer marketing industry the “creator economy” within the greater spectrum of the digital economy.[3] 

Many people view influencers as social media's celebrity spokespersons, and, of course, celebrity endorsement is a form of marketing that predates the digital economy. However, although the concepts are similar, the formats and contexts have significantly evolved. The appeal of following or watching an influencer is new. Traditional celebrities who endorse products, such as athletes or movie stars, generally keep their audiences at a distance and maintain relatively private profiles. A brand usually makes big payments to these spokespeople and engages one, or a few at most, celebrities to represent their products. The contracts with these celebrities generally specify a certain number of TV ads, photo shoots, or event appearances. Merchants hope audiences see these marketing spots and buy their products; however, the return of this kind of marketing spend has always been hard to measure. It also makes it difficult to personalize the ads and target different viewers.

In contrast, influencers such as YouTubers, TikTokers, bloggers, and Instagram stars are trendsetters who are personable, real, relatable, and sometimes not afraid of sharing failures or life challenges with their audiences. Many test products and share results on the platform. Eventually they can persuade or influence followers to buy the products and services they highlight. Successful influencers often branch into many other areas, including establishing their own labels (clothing, make-up, gym products), participating in reality shows, or opening entertainment arenas. Therefore, these entrepreneurs can build business empires just like traditional celebrities. Similarly, they can engage in inappropriate actions that ruin their reputations and the investment of their sponsoring brands.

The appeal of influencers rests in their transparency, trustworthiness, and ability to deliver individualized messages. Instead of spending large dollar amounts on one celebrity, brands can more easily switch focus and split funds across several influencers. Because of the decentralized nature of this kind of marketing, each influencer can connect with a different group of customers, creating deeper impacts.[4]

The Growth of Influencer Marketing

The rise of social media influencers has been an economic boon for many individuals and companies.[5] The estimated size of the influencer marketing industry varies; however, several industry reports consistently point to the high growth that the industry has recently experienced as well as the persistent growth forecast for the future. For instance, a frequently cited statistic shows that the industry revenue has grown 250% over the last five years globally, and that it will likely post double-digit growth in the next decade.[6]  

Many believe widespread high-speed internet connectivity, the proliferation of smartphones, and the popularity of social media platforms have all contributed to the tremendous growth of video content and enabled influencer activities. The pandemic provided opportunities for further growth, as viewers consumed more content during the shelter-in-place periods.

As the pandemic has started to recede, companies have adapted their marketing strategies to suit the post-COVID environment and changing consumer preferences.[7] As such, a growing number of companies use influencer marketing in the U.S. One estimate shows that roughly three quarters of American companies used influencer marketing in 2022, and that over 85% of companies will engage influencers as part of their marketing plans by 2025.[8] Recognizing the significance of the trend, several universities now offer classes related to influencer marketing.[9]

The Challenges of Influencer Marketing

The major challenges of influencer marketing include insufficient measures of effectiveness and the prevalence of fake followers. To address these issues, the industry has implemented several measures. For example, industry participants have been adopting matrixes for more active measurement of the impacts of specific posts, which can better reflect the return on investment for a particular influencer. Although the number of followers is certainly the prime indicator of an influencer’s popularity, it only represents reach (the number of people who see the post) but not necessarily engagement rate. The engagement rate of a particular post means the percentage of followers who interact with the content by liking, sharing, or commenting on the post.[10] A higher engagement rate usually translates to more purchases of the products featured.

Another issue is that some influencers could be using bots to generate fake followers and boost their popularity. Over time, companies have been applying auditing tools more frequently to identify fake followers and authenticate influencer accounts.

Not All Influencers Are Alike

Influencers with large followers are visible to a sizable audience and can elevate a brand, but they are also costly to engage. Some brands may be interested in smaller influencers with targeted messages capable of reaching particular demographic groups, or they may do so out of budget concerns. Compared to influencers with huge followings, smaller influencer content is usually very authentic with limited special edits. In addition, some smaller influencers have very high engagement rates, creating high-profit potential.

The industry generally classifies influencers into four categories based on the number of followers: mega-influencers, macro-influencers, micro-influencers, and nano-influencers.[11] However, the classification of influencers is more of an art than exact science, and the cut-offs between categories are not always universal across platforms.

Nano-influencers usually have fewer than 5,000 followers and demand the least payment per post in the influencer ecosystem.[12] They are generally influential within their communities or neighborhoods. As such, they recommend products or services to family and friends, which can generate high engagement rates. The drawback is that although they have deep relationships with their followers, they usually lack the power to reach a larger audience. 

A micro-influencer is typically someone with fewer than 100,000 followers, but more than a nano-influencer.[13] Micro-influencers may charge several hundred to a few thousand dollars per post. They usually focus on a specific area and have expertise on a particular subject. As a result, their followers share similar interests. Some micro-influencers are attempting to gain more followers so that they can step up to a more lucrative category, while others are happy with their niches.

A macro-influencer has more than 100,000 followers but typically fewer than 1 million. Many start as nano- or micro-influencers and build up their follower count through engaging and inspiring content. They target a certain customer type or demographic (e.g., young males, middle-age females) but have broader subject or industry coverage than micro-influencers.

Influencers move into the “mega” territory if they have more than 1 million followers. These influencers have the largest, but also the most diverse, groups of followers. This means they are probably more well-known than they are influential. In other words, a product that appeals to the general population will be more suitable for mega-influencers to promote.

Influencer Compensation Varies Based on Follower Size

The brand usually establishes a relationship with an influencer in one of the following ways: directly with the influencer, by way of an agency that represents the influencer, or through a consulting entity that finds an appropriate influencer for the brand’s products and image. As the influencer marketing space grows, the industry has become more segmented. There are firms that specialize in campaign management, influencer relationship management, analytics and reporting, and compliance and fraud detection.[14]

Available statistics indicate that influencer compensation depends on several factors. Not surprisingly, the top factor is the number of followers. Other factors include the industry (which impacts the merchant’s ability to pay), competition in the industry (how many influencers are in a particular industry), and the amount of work influencers need to do in order to produce content (e.g., whether the post is a video or photo, how much time is required to edit the post, etc.).

An influencer is usually compensated under one of two types of arrangements if the payment is made in the form of cash. The first type is a flat fee agreement, where an influencer receives a fixed amount per post in return for featuring a certain product. From the influencer’s perspective, the payment is guaranteed regardless of the outcomes of the content posted. The costs are equally certain for brands; however, the success of the campaign is unknown until a post goes live.

Alternatively, the influencer can recommend a product and share a link or promo code with his or her followers. Every time a viewer uses the link or code to make a purchase, the influencer earns a portion of the proceeds.[15] Some argue that this “commission-like” pay structure generates the most effort from influencers because there is no guaranteed income unless they inspire actual purchases.[16]  

Many reports of influencer earnings are anecdotal. Industry reports show that, on average, nano-influencers can make $30,000 to $60,000 per year while micro-influencers can make between $40,000 and $100,000 per year. A macro-influencer with up to 1 million followers may get approximately $10,000 per post.[17] Mega-influencers may be able to charge an average of $100,000 to $250,000 per post.[18] The number can go as high as a million dollars if the influencer is a famous celebrity.[19] Another industry analyst reports that the fees not only vary by follower size but also differ across platforms, similarly ranging from hundreds to as high as $10,000 or $12,500 per post for micro- and macro-influencers. For each 1,000 followers, per-post payment ranges from $5 to $25 for platforms like TikTok, YouTube, Facebook, and Instagram. [20] 

Tax Laws Classify Influencers as Self-Employed

Regardless of the payment structure and follower size, influencers are not considered employees of the brand or the agency that represents them. Under the binary classification of workers, these content creators are classified as self-employed. This means they are independent contractors and are responsible for making quarterly estimated tax payments on their online marketing income. They also need to pay the full 15.3% self-employment tax on their earnings (12.4% for Social Security and 2.9% for Medicare). In other words, influencers should receive Form 1099s from the entity they contract with and follow similar tax procedures as small business owners.[21]

On the expenses side, influencers can deduct business expenses from gross receipts to calculate their taxable income. As long as these expenses are ordinary and necessary, meaning that they are common, helpful, appropriate, and occur frequently in a taxpayer’s trade or business, they are generally deductible. These deductions are permitted even if the business has losses.

Common business costs for influencers may include home office expenses, travel expenses (such as mileage, lodging, and flights), internet bills, computer equipment (hardware and software, camera, and photography equipment), business website costs (domain name, building web contents, and maintenance), and promotional items. These items need to be exclusively for work or business uses. If an expense (e.g., cell phone) has both personal and business elements, only the business portion is deductible. As such, keeping good records to support the deduction is always advisable.

Recent Changes Affect 1099 Reporting Thresholds

Influencers are most likely to receive a Form 1099-NEC from the entity they contract with, which reports non-employee compensation over $600.[22] To a lesser extent, they may receive a Form 1099-K if they collect payments through PayPal or third-party settlement organizations (TPSOs).[23] Taxpayers are in the “transition year” for Form 1099-K in 2023.

In order to be consistent with other Form 1099s, the American Rescue Plan of 2021 changed the Form 1099-K issuing threshold from 200 transactions and an aggregate amount of $20,000 per year to $600 a year regardless of the number of transactions. In late December 2022, the IRS delayed the revised reporting thresholds for one year, meaning the existing threshold remains in place through December 31, 2023.[24]

The additional year is intended to provide more time for taxpayers to prepare and transition to the new requirement. However, it does extend the reporting inconsistency across the influencer space by another year: An influencer that typically receives payments through PayPal may not receive a tax document at all, while another content creator with a similar income level may receive Form-NEC from a different platform.

Existing Hobby vs. Business Criteria Apply to Influencers

Because influencers usually generate pleasant messages and act in an informal manner, some may consider their marketing activities as hobbies instead of businesses. When it comes to tax reporting, there are key differences between the two. 

Influencer marketing income is generally considered to be business income whether an influencer works full time or part time. This is because an influencer clearly conducts the online activities with the intent to profit instead of personal enjoyment. This classification also matters from an expense reporting perspective. Expenses for a business that intends to make a profit are usually deductible, but they are nondeductible for “activities not engaged in for profit.”

Historically, tax rules limit expense deductions associated with hobbies and any hobby losses incurred cannot offset income from other sources. After the Tax Cuts and Jobs Act (TCJA) of 2017, hobby-related itemized deductions were suspended for the 2018 to 2025 tax years. As a result, individuals will not be able to offset hobby income with hobby expenses until the 2026 tax year at the earliest. This revised tax treatment made classifying side activities as a business, rather than as a hobby, more desirable.

Some loopholes exist when taxpayers misrepresent their casual pursuits as business activities and use associated losses to offset wage income, utilize loss carryover, or take advantage of expense deductions. For instance, a taxpayer may claim to be in the influencer marketing business when their  activities actually only qualify as a hobby. The IRS is well aware of these types of abuses in a non-influencer setting, which is why a Treasury Inspector General for Tax Administration (TIGTA) report recommended IRS audit efforts focus on taxpayers with irregular income-expense patterns. These specifically include high-income taxpayers with multiple years of Schedule C losses or taxpayers with several years of large losses but little to no business income.[25] In the context of influencer marketing, if an influencer has just started his or her business and incurs losses, such losses are legitimate and can offset other sources of income. However, if the activity constantly shows losses across several years, the IRS may consider it a hobby and disallow expense deductions or loss offsets. A safe harbor clause specifies that if an activity shows a profit in three out of five years, the IRS will presume it to be a business. However, many other factors may be considered in making this determination.[26]

Products and Services Given to Influencers are Taxable

Many influencers begin their endeavors by receiving free products and building their follower spaces. As they become more established, free products may no longer be enough to compensate them. Instead, the payment package becomes a combination of cash and products. A 2018 survey shows approximately 50% of merchants paid influencers in-kind compensation as part of their payment.[27] In many cases, these products and services can be highly valuable as influencers become more popular. This generates questions as to how these items are treated from a tax perspective. 

The in-kind or “gift bag” payment is not a new issue. It became widely discussed in a non-digital setting when Oscar-nominated celebrities received “swag bags” arguably worth $150,000 to $200,000 each.[28] The IRS eventually published an FAQ clarifying that these products and services claimed by recipients are taxable.[29]

The IRS explains that these giveaways are not considered gifts for federal income tax purposes (which have different tax consequences) because the providers do not offer the products solely out of affection or respect. Instead, the merchants generally anticipate something in return. For instance, they usually expect celebrities to highlight their products in public. If the in-kind offers include gift certificates or vouchers (e.g., for trips or personal services), they will be taxable when the recipient uses the item. In terms of tax reporting, it is analogous to the recipient getting taxable income at the fair market value of the products. As such, the merchants distributing the “gifts” should issue a Form 1099-MISC to recipients and record the fair market value of the items and services.

Practitioners have indicated that the current tax treatments for “gift bags” are generally applicable to influencer compensation. However, some point out that part of the “gifts” may be excluded from income, depending on the nature and the circumstances.[30] For instance, when an influencer receives a product to review, the value of the product may not count as compensation. They argue that this arrangement is similar to writing a book review since the sample copy sent to reviewers is not taxable. However, others claim that there are other considerations. Some influencers review highly valuable items such as designer clothing, cars, or technology equipment, and these payments should not be disguised as gifts. In addition, influencers may benefit from considerations of certain provisions that are traditionally applicable to employees, such as working condition fringes[31] and de minimis fringe benefits.[32]

Influencer Tax Policy Can Build on Existing Digital Economy Experiences

Influencer marketing is an emerging industry with constantly evolving practices and expectations. However, although the phenomenon is innovative and new, general tax rules provide good guidance for influencer tax compliance. Federal and state authorities have been through a steep learning curve with other applications in the digital economy over the last decade on both tax and non-tax issues. Therefore, regulators don’t have to start from scratch when it comes to influencer marketing.

Existing tax rules applicable to self-employed individuals, hobby activities, celebrity endorsement, and in-kind payments can all provide instruction for handling these issues in a digital context. Tax authorities are also aware of the common abuses and loopholes in these areas. While there may be considerations specifically for influencers, there is no need for comprehensive overhaul, and the general principles can be extrapolated to the influencer setting. Tax authorities can help influencers by formally making the connection and informing them of applicable rules. For example, publishing an FAQ or a webpage dedicated to influencer tax reporting would be a good starting point. Tax authorities can then pursue opportunities for further improvements on compliance.

Parallels Between the Influencer and the Sharing Economies

The sharing economy (i.e., private individuals sharing their assets or services for a fee, usually through the internet) also offers many challenges similar to influencer marketing from a tax reporting perspective. Most sharing economy participants are part-time workers who are independent contractors. As recently as five to seven years ago, studies documented that a fair portion of Uber drivers were unclear about their tax reporting obligations.[33] As the IRS provides more guidance on its website to clarify tax rules,[34] and software developers create products with these workers in mind, the confusion is easing over time.

As is the case with the influencer market, the sharing economy still poses challenges for tax compliance because it involves a large number of small taxpayers. It is burdensome for taxpayers to keep track of all expenses, and it may not be economical for revenue agents to investigate potential underreporting of income that involves small amounts. One potential strategy is to focus on the entities that issue Form 1099s and ensure they correctly follow the information reporting requirements. Another possibility is allowing taxpayers to elect a standard deduction, instead of documenting and deducting actual expenses, for sharing economy-related income in order to simplify the compliance process.[35] Both recommendations could also apply to influencer marketing. Given the high percentage of part-time workers in the influencer marketing industry, the compliance process could be overly complicated, especially for micro- and nano-influencers.

Finally, several media sources report that many influencers are willing to follow tax rules but are unaware of the reporting procedures.[36] As such, enhancing outreach and education efforts may be a good area to focus on, in addition to enforcement. The Federal Trade Commission (FTC) has taken a similar approach, sending out “warning letters” and issuing updated guidance in conjunction with their enforcement efforts.[37]

Looking Beyond Tax Issues in the Influencer Field

The IRS is not the only government agency that has interests in the influencer marketing industry. The FTC indicates that if influencers endorse products through either review or promotion, they need to disclose such relationships in their social media posts.[38] The disclosures need to be clear, transparent, and easy to understand. If knowing the gift or incentive would affect a follower’s opinion regarding the recommendation, the arrangement should be disclosed. The FTC brought its first action against a social media influencer for failing to make appropriate disclosures on sponsored posts in 2017,[39] and it continues to bring more cases today.[40]

When it comes to maintaining fair and orderly operations of security markets, the Securities and Exchange Commission (SEC) also has a history of bringing cases against individuals who engage in unlawful conduct to influence stock trading and prices. One such example involves a group of influencers who used their large social media followings to advocate certain stocks, then took advantage of the higher share prices by selling their own shares without telling their followers. The SEC has indicated that such schemes are akin to stock price manipulation in the social media setting.[41]

Amid the glamour and popularity created by influencers, some observers also caution against certain side effects. For instance, if a young audience participates in a virtual space, there are data privacy issues that must be considered. In addition, overly engaging in the online space for prolonged periods has been linked to mental health issues. Although public policy has yet to take actions in these areas, researchers have been drawing attention to them.

Bringing Out the Best in Influencer Marketing

The development of influencer marketing has generated enormous interest in the industry, leading to its rapid growth while simultaneously creating blind spots from a tax compliance perspective.

The good news is that tax authorities have been through a similar learning experience with the overall digital economy, which was also disruptive to the prevailing tax environment. As the industry continues to evolve, tax authorities will adapt to industry trends. In fact, recent developments in the sharing economy space — such as new compliance software, education tools, and guidance — have had positive spillover effects on the influencer economy.

In addition, the influencer economy has several parallels to non-digital fields — such as celebrity endorsement and in-kind payments — which have existing tax rules that govern these activities. From a federal tax perspective, the best starting point is to clarify the tax rules that influencers should follow. A dedicated IRS webpage similar to that for the gig economy would help these young and tech-savvy entrepreneurs. The tax authority should also inform social media platforms, merchants, and agencies that interact with influencers about their Form 1099 responsibilities for both in-kind and cash payments.

Finally, there is room for non-tax related improvement in the social influencer field. Many followers engage with influencers on the basis of buying products or services that these influencers endorse. Although most content creators enter the space to generate profit and provide entertainment, they could also use their exceptional influence to send positive messages to their audiences — using their sway to “do good” for society. 

Endnotes

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[1] Joseph Pisani and Theo Francis, “These TikTok Stars Made More Money Than Many of America’s Top CEOs,” The Wall Street Journal, February 3, 2022, https://www.wsj.com/articles/these-tiktok-stars-made-more-money-than-many-of-americas-top-ceos-11642078170.

[2] Some define influencers broadly to include people with blogs, vlogs, or their own webpages, whereas others only consider people on social media platforms as influencers.

[3] Influencer Marketing Hub, “Creator Economy,” accessed February 1, 2023, https://influencermarketinghub.com/creatoreconomy/. 

[4] Chavie Lieber, “How and Why Do Influencers Make So Much Money? The Head of an Influencer Agency Explains,” Vox, November 28, 2018, https://www.vox.com/the-goods/2018/11/28/18116875/influencer-marketing-social-media-engagement-instagram-youtube.

[5] For further information on the influencer marketing industry, see Natalie Burclaff, “Influencer Marketing: A Research Guide,” Library of Congress, January 25, 2021, https://guides.loc.gov/influencer-marketing/introduction.

[6] Statista Research Department, “Influencer Marketing Market Size Worldwide from 2016 to 2022,” Statista, January 6, 2023, https://www.statista.com/statistics/1092819/global-influencer-market-size/?cid=other-eml-mtg-mip-mck&hlkid=68220a88f4944d8b8847f698c9e1f5a1&hctky=1926&hdpid=9d7152d0-0a06-4696-ba37-f67758ab487b. 

[7] Market and Markets, “Influencer Marketing Platform Market,” December 2020, https://www.marketsandmarkets.com/Market-Reports/influencer-marketing-platform-market-294138.html.   

[8] Statista Research Department, “Influencer Marketing Usage Rate in the U.S. from 2020 to 2025,” Statista, January 6, 2023, https://www.statista.com/statistics/1198525/influencer-marketing-share-usa/.

[9] For example, see 1) eCornell, “Building the Brand Through Influencer Marketing,” accessed February 1, 2023, https://ecornell.cornell.edu/courses/marketing/building-the-brand-through-influencer-marketing/; 2) Kalhan Rosenblatt, “Big 'gram on Campus: At USC, Students Train to Become Influencers,” NBC News, March 14, 2020, https://www.nbcnews.com/news/us-news/big-gram-campus-usc-students-train-become-influencers-n1156881.

[10] Specifically, engagement rate is the ratio of total likes, shares, and comments divided by the number of followers. It is a key metric used in digital marketing to measure the performance of a particular post or campaign. A slightly different calculation is engagement by reach. Instead of using the number of followers in the denominator, this alternative calculation uses the number of viewers.

[11] The influencer classification is from the following articles: 1) Kaya Ismail, “Social Media Influencers: Mega, Macro, Micro, or Nano,” CMSWire, December 10, 2018, https://www.cmswire.com/digital-marketing/social-media-influencers-mega-macro-micro-or-nano/; 2) Dianne Esber and Jane Wong, “Discussions in Digital: Influencer Marketing is Ready for Its Close-up,” McKinsey & Company, April 15, 2020, https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/discussions-in-digital-influencer-marketing-is-ready-for-its-close-up; 3) Chavie Lieber, “How and Why Do Influencers Make So Much Money?”

[12] The first article in endnote 11 defines nano-influencers as someone with fewer than 1,000 followers. 

[13] The second article in endnote 11 uses a slightly different classification. It considers micro-influencers as having the smallest group of followers with fewer than 5,000. Medium influencers have between 5,000 and 100,000 followers.

[14] Market and Markets, “Influencer Marketing Platform Market.”

[15] McKinsey & Company, “Mind the Gap: Influencer Economy,” September 13, 2022, https://www.mckinsey.com/~/media/mckinsey/email/genz/2022/09/13/2022-09-13b.html. 

[16] There are several variations within this type of arrangement, including cost per engagement, cost per click, and cost per acquisition. See Activate, “Two Sides of the Same Coin: Exploring the Brand and Influencer Relationship in Influencer Marketing,” 2018 State of Influencer Marketing Study, accessed February 1, 2023,  https://bit.ly/3Z4nDZY. 

[17] Other examples of formula-based rates can be found in the following article, focusing on Instagram posts: Stacey McLachlan, “Instagram Influencer Pricing: How to Determine Influencer Rates in 2023,” Hootsuite, August 5, 2021, https://blog.hootsuite.com/instagram-influencer-rates/. 

[18] Chavie Lieber, “How and Why Do Influencers Make So Much Money?”

[19] BBC, “How Much Does Kylie Jenner Earn on Instagram?” July 26, 2019, https://www.bbc.co.uk/newsround/49124484. 

[20] Neal Schaffer, “How Much Does Influencers Marketing Cost Today?” December 4, 2022, https://nealschaffer.com/influencer-marketing-cost/. 

[21] Joyce Beebe, “How Should We Tax the Sharing Economy?” Baker Institute Report, October 4, 2018, https://www.bakerinstitute.org/research/taxing-sharing-economy.

[22] Joyce Beebe, “Recent Changes to Sharing Economy Tax Reporting,” Baker Institute Blog, May 25, 2021, https://www.bakerinstitute.org/research/recent-changes-sharing-economy-tax-reporting. 

[23] PayPal Newsroom, “New U.S. Tax Reporting Requirements: Your Questions Answered,” updated December 30, 2022, https://newsroom.paypal-corp.com/2021-11-04-New-US-Tax-Reporting-Requirements-Your-Questions-Answered. 

[24] IRS, “Revised Timeline Regarding Implementation of Amended Section 6050W(e),” Notice 2023-10, December 23, 2022, https://www.irs.gov/pub/irs-drop/n-2023-10.pdf. 

[25] Treasury Inspector General for Tax Administration, “Opportunities Exist to Identify and Examine Individual Taxpayers Who Deduct Potential Hobby Losses to Offset Other Income,” Ref. No. 2016-30-031, April 12, 2016. The report is no longer available on TIGTA website, but the following link provides a summary: https://taxprof.typepad.com/taxprof_blog/2016/05/tigtairs-misses-88-of-hobby-loss-cases-.html. 

[26] Joyce Beebe, “Understanding the Tax Implications of Hobby Proceeds versus Business Income,” Baker Institute Issue Brief, December 8, 2022, https://www.bakerinstitute.org/research/understanding-tax-implications-hobby-proceeds-versus-business-income. 

[27] Activate, “Two Sides of the Same Coin: Exploring the Brand and Influencer Relationship in Influencer Marketing.”

[28] See 1) Robert Wood, “Oscars Hand Out Pricey Gift Bags, But Beware IRS Form 1099,” Forbes, February 21, 2015,  https://www.google.com/search?client=firefox-b-1-e&q=Oscars+Hand+Out+Pricey+Gift+Bags%2C+But+Beware+IRS+Form+1099%2C+Forbes%2C; 2) Robert Wood, “Oscar Nominees Pay Tax on $140,000 ‘Gifts’- IRS Form 1099 Says No Gift,” Forbes, March 27, 2022, https://www.forbes.com/sites/robertwood/2022/03/27/oscar-nominees-pay-tax-on-140000-gifts-irs-form-1099-says-no-gift/?sh=5b6f72be2e23.     

[29] IRS, “Gift Bag Questions and Answers,” March 4, 2020, https://www.irs.gov/newsroom/gift-bag-questions-and-answers. 

[30] Stephen Tackney, “‘Swag Bags’ Are Back: Influencers and Noncash Compensation,” The Tax Adviser, June 2022, https://www.thetaxadviser.com/issues/2022/jun/influencers-noncash-compensation.html. 

[31] Section 132 of the Internal Revenue Code, see https://www.law.cornell.edu/cfr/text/26/1.132-5. 

[32] IRS, “De Minimis Fringe Benefits,” July 6, 2022, https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits (The IRS has previously indicated items with a value exceeding $100 could not be considered de minimis, and some have been using that value as a guideline.)

[33] Diane M. Ring and Shu-Yi Oei, “The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums,” Columbia Journal of Tax Law  8, no. 1 (2016): 98-105, https://journals.library.columbia.edu/index.php/taxlaw/article/view/2842.

[34] IRS, “Gig Economy Tax Center,” last updated October 4, 2022, https://www.irs.gov/businesses/gig-economy-tax-center#depreciation. 

[35] See (1) Kathleen DeLaney Thomas, “Taxing the Gig Economy,” University of Pennsylvania Law Review 166 (2018): 1454-1466, and (2) James Alm, Joyce Beebe, Michael S. Kirsch, Omri Marian, and Jay A. Soled, “New Technologies and the Evolution of Tax Compliance,” Virginia Tax Review 39, no. 3 (2020): 350-351.

[36] Sony Kassam, “Social Influencer Freebies Worth Billions Present Tax Temptation,” Bloomberg Law, May 23, 2019 (subscription required).

[37] Lesley Fair, “Three FTC Actions of Interest to Influencers,” September 7, 2017, https://www.ftc.gov/business-guidance/blog/2017/09/three-ftc-actions-interest-influencers. 

[38] FTC (Federal Trade Commission), “The FTC’s Endorsement Guides: What People are Asking,” updated August 27, 2020, https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides-what-people-are-asking. 

[39] FTC, “CSGO Lotto Owners Settle FTC’s First-Ever Complaint against Individual Social Media Influencers,” September 7, 2017, https://www.ftc.gov/news-events/news/press-releases/2017/09/csgo-lotto-owners-settle-ftcs-first-ever-complaint-against-individual-social-media-influencers?stream=technology. 

[40] FTC, “Tea Marketer Misled Consumers, Didn’t Adequately Disclose Payments to Well-Known Influencers, FTC Alleges,” March 6, 2020, https://www.ftc.gov/news-events/news/press-releases/2020/03/tea-marketer-misled-consumers-didnt-adequately-disclose-payments-well-known-influencers-ftc-alleges. 

[41] U.S. Securities and Exchange Commission, “SEC Charges Eight Social Media Influencers in $100 Million Stock Manipulation Scheme Promoted on Discord and Twitter,” December 2022, https://www.sec.gov/news/press-release/2022-221.

 

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